Fiat as a higher-cost producer

[Paul Rollins <psroll@domain.elided>]

<<<<<<<<<<FIAT is not a high cost manufacturer, ...>>>>>>>>>>>>>>>

Although FIAT is probably not the highest-cost producer, compared to
U.S. production they are higher-cost producers. Western Europe
(including Italy), in general, is a high-cost area for manufacturing.
That's why BMW, Daimler-Chrysler, etc, are building an increasing
portion of their cars outside of that area, including in the U.S.

Labor costs in Western Europe are high because of high health and social
benefits cost, and low productivity which comes from long vacations,
many holidays and sick days, strikes and an assumption of job security
promoted by government that counters any incentive to increase personal
productivity. As an example of the costs in the region of the
Eurodollar, Porsche's total, per-hour labor cost is more than twice as
high in Germany as Ford's is in the U.S.

<<<<<<<<<<<<< ...with total production getting on for 4m units worldwide
they are not that small. >>>>>>>>>>>>>>>>>>>

"Not that small", or even "big" won't be good enough to compete as the
industry consolidates. "Huge" will be the threshold for viability. That
is why FIAT will probably be merging with another company in the near
future. In not too many years, "the big three" will refer to the world
market of auto production, not the U.S.

Paul Rollins
USA

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